In the latest sign that U.S. manufacturing is in fine fettle, the New York Federal Reserve’s Empire State manufacturing index hit its highest level in three years during the month of October. A raft of recently released data also serves to indicate that the manufacturing sector has performed particularly well this year.
The reasons for the boom in the sector are not hard to seek. The Trump administration’s pro-business approach along with an improvement in key economies across the world has created a positive atmosphere for the industry. This is why it makes great sense to invest in manufacturing stocks, especially because these stocks have performed exceedingly well this year.
Empire State Index Hits 3-Year High
In October, the New York Federal Reserve’s Empire State manufacturing index increased from 24.4 to 30.2 in October. This figure exceeds most estimates and is also the highest level recorded in three years. Even though the index declined by a point to 24.4 in September, in August it had gained 15 points to hit 25.2, the highest reading since September 2014.
The index’s latest reading shows that the general optimism index has undergone and improvement. Such an upturn has come about despite a decline in new orders. However, shipments increased from 16.2 to 27.5. A gauge measuring the number of employees increased from 10.6 to 15.6. Additionally, indexes gauging for the outlook in the next six months also underwent an improvement.
ISM Manufacturing, Factory, Durable Orders Indicate Wider Improvement
Although the scope of this particular survey is limited, signs of wider improvement are already evident. According to a Commerce Department report released earlier this month, factory orders increased by 1.2% in August, rebounding from a decline of 3.3% in July. Orders for durable goods and non-defense capital goods except aircraft both increased by 2% and 1.1%, respectively, over August.
Also, the ISM manufacturing index scaled a 13-year high in September. The index climbed to 60.8% in September from 58.8% in August, scaling the highest level since May 2004. Notably, 17 of the 18 industries reported growth last month, led by textile mills and machinery.
